This is a motion by the government for summary judgment. The defendant has interposed a cross-motion for summary judgment. Fed. R. Civ. P. 56. The material facts in the case are not in controversy.

This case involves a dispute regarding the obligations of the defendant, Vincent J. Cuti, an attorney of the State of New York, as escrow agent, resulting from a tax levy affecting his principal, the Bivona Vista Restaurant, Inc.

The government brought this action against Vincent J. Cuti, Jr. after he failed to honor a tax levy imposed by the Internal Revenue Service (I.R.S.) upon moneys held by him which originally came into his possession as escrow agent for Bivona Vista Restaurant, Inc.

Since the chronology of events is crucial to the disposition of the motions before this Court, it is set forth below.

On August 27, 1971, the taxpayer, Bivona Vista Restaurant, Inc., sold the assets of its business, and placed the proceeds of sale, amounting to $4,555.20, in escrow with its attorney, Vincent J. Cuti, Jr.
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The government's complaint and supporting affidavit indicate that on October 28, 1971, January 28, 1972, December 18, 1972, and February 2, 1973, a delegate of the Secretary of the Treasury of the United States issued and served upon Mr. Cuti, notices of levy on all property and rights to property in his possession belonging to the taxpayer, on which liens had attached in favor of the United States of America. Such liens included any sums of money held in escrow by the defendant to or for the account of the taxpayer to the extent that such property and rights to property were necessary to satisfy the amounts due from the taxpayer. Final demands were issued and served upon Mr. Cuti on January 28, 1972, July 18, 1972, and October 11, 1973.

In his affidavit in support of his notice of cross-motion the defendant expressly conceded: that he has no standing to and does not challenge either the validity or the amounts of the assessments made against the taxpayer; and that he does not contest or dispute either the validity or the amounts of the levies served upon him, or that the same were valid and accurate.

Section 6332(a) of Title 26 of the United States Code (Internal Revenue Code) provides in pertinent part:

[Any] person in possession of (or obligated with respect to) property or rights to property subject to levy upon which a levy has been made shall, upon demand of the Secretary or his delegate, surrender such property or rights (or discharge such obligation) to the Secretary or his delegate except such part of the property or rights as is, at the time of such demand, subject to an attachment or execution under any judicial process."

Section 6332(a) gives the possessor of property upon which a levy has been made only two defenses: first, that such person was not in possession of property which was subject to levy; and second, that the property was subject to prior judicial attachment or execution. The statute provides no other defenses. See United States v. Manufacturers Trust Co., 198 F.2d 366 (2d Cir. 1952); United States v. Third National Bank & Trust Co., Scranton, Pa., 111 F. Supp. 152 (D.C.M.D. Pa. 1953).

Section 6332(c)(1) provides that when one dishonors a tax levy, he is personally liable to the United States for the value of the property not surrendered, together with costs and interest. At the outset of this action, the amount sued for by the government was $4,555.20, plus interest and costs. The defendant does not dispute the value of the property not surrendered, that is $4,555.20. The government is also seeking to exact a penalty from the defendant pursuant to Section 6332(c)(2) for his failure to turn over the corpus of the escrow account.

The defendant has cross-moved for summary judgment. His supporting papers do not establish that the property which the government seeks to recover was subject to prior judicial attachment or execution. Therefore, that defense is not available to the defendant. The basis upon which the defendant has predicated his refusal to pay over the escrow fund to the government is that the same does not constitute "property or rights to property" of the taxpayer made subject to levy by the provisions of Section 6332 of the United States Code. Defendant contends that where an escrow account may be subject to the claims of other creditors whose claims have not been the object of prior judicial attachment or execution, the property in the escrow account is not the property of the taxpayer. However, the defendant has failed to provide any authority for this proposition. After exhaustive research, the Court has been unable to find any authority for the defendant's argument. One must ask rhetorically then, if Mr. Cuti was not in possession of property or rights to property of the taxpayer, then who was in ...

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